Aya Gold & Silver rises on Zgounder optimism, despite Q3 miss

Aya Gold & Silver (TSX: AYA, US-OTC: AYASF) confirmed on Friday that delays in commissioning its expanded Zgounder mine dented its production in the third quarter, but said it’s on track to achieve commercial production by year-end.

Silver production totalled 355,927 oz. in what the company called a transitional quarter. That’s down 31% from the 519,085 oz. it produced in the same quarter a year ago.

According to CEO Benoit La Salle, the company experienced non-recurring challenges at Zgounder, such as commissioning of the ball mill, which postponed some operational milestones to the fourth quarter. Due to the delay, it decided to lower its 2024 production guidance to 1.6-1.8 million oz. silver.

“These temporary setbacks are now behind us, and our team is on track to deliver commercial production at Zgounder before year-end,” La Salle said, adding that the mine will be central to the company’s growth plans in the coming years.

Located in the central Anti-Atlas mountains, Zgounder is considered the second most important silver producer in Morocco. It currently holds 8.6 million tonnes in reserves at 257 grams per tonne silver for 70.9 million oz.

After achieving commercial production in January 2019, Aya set out to expand the mine’s nameplate capacity from 700 tonnes per day to 2,700 tonnes, which would quadruple its annual production to 6.8 million oz. of silver. First pour from the expanded mine was achieved in July of this year.

In its third quarter results release, the Canadian miner noted that the expansion is essentially complete at 99%, compared to over 95% at the end of the second quarter. The project is expected to be completed on budget; It’s spent roughly US$159 million on growth and sustaining capex and expects to spend another US$7 million to complete the build.

By 11:20 a.m. EDT, shares of Aya Gold had recorded a gain of 13.7% to $13.42. The stock surge sent the company’s market capitalization to $1.8 billion.